Before the last bite of candy corn has been consumed and the costumes are packed away until next Halloween, the ghost of Christmas Future is haunting the aisles of retailers and the hallways of virtually any company that produces goods and services.
Though revenue has the potential to surge in the fourth quarter as consumers buy for the holidays and financial executives scurry to spend their budgeted allowance for resources, this is also a season for greater risk. The safety consultants at Travelers told Mid-MarketPulse managers should check the following two sources to avoid being vulnerable to theft in the remaining days of the year.
Sticky Fingers in the Supply Chain
It doesn’t sound sexy, which is likely why managing the logistics of a supply chain is an often overlooked business consideration, according to Travelers. The problem is that when shipments are stolen or counterfeited, the company may still be held liable. Both consumer and industrial businesses lose about $250 billion each year because of counterfeit components. And when the goods are real, they are in danger of being stolen. Eighty-five percent of all major cargo theft involves trucks, according to Transported Asset Protection Association (TAPA), which estimates a loss to businesses of more than $10 billion annually worldwide.
While monetary loss can be tracked on a balance sheet, it’s difficult to calculate the loss of customers’ confidence in the business it was depending on. To secure the supply chain, the TAPA recommends the following:
- Select transportation partners with trusted credentials.
- Screen and validate the contents of cargo being shipped.
- Send notification of contents in advance to the destination.
- Use locks and tamper-proof seals.
- Restrict workers’ access to only what is necessary to perform their jobs.
- Inspect cargo on entry.
- Train staff for risk management on policy, procedures, and operational, and technical controls and practices.
Prolific Pilfering Among the Rank and File
The 2014 U.S. Retail Fraud survey uncovered some startling numbers: while shoplifters account for 11% of store losses, employees are even more likely to steal, to the tune of 38%. Outside retail, small and mid-sized businesses are vulnerable to staffers thieving. Sixty-four percent of SMBs reported that an employee stole from them, yet only 16% reported it to the police, according to a study from the University of Cincinnati.
The most common item stolen? Cash. In the university study, the amount ranged between $5.00 and $2 million. Additionally (and not surprisingly) other coveted items were products sold by the business, production materials, tools and equipment. More than half (60%) of those who couldn’t keep their hand out of the cookie jar occupied the bottom rung of the company ladder.
Proactive strategies to prevent staff from stealing include:
- conducting pre-employment background checks
- checking references
- explaining code of conduct during orientation
Once the person is hired, these other tactics can also help prevent loss, according to Caron Beesley, a business owner and marketing communications consultant.
Don’t be Afraid to Audit
Identifying high-risk areas such as expense and vacation reports can help detect theft and fraud, especially when done on a regular basis. “Audits can also be a significant deterrent to fraud or criminal activity because many perpetrators of workplace fraud seize opportunity where weak internal controls exist,” Beesley writes.
Recognize the Signs
“Studies show that perpetrators of workplace crime or fraud do so because they are either under pressure, feel under-appreciated, or perceive that management behavior is unethical or unfair, and rationalize their behavior based on the fact that they feel they are owed something or deserve it,” Beesley observes. She recommends looking for red flags such as:
- unexplained behavior changes
- being secretive and preferring to be unsupervised
- disappearing records
- reluctance to take vacation
The latter, she notes, is because theft is often discovered when another worker is substituting duties and notices that things aren’t quite right.
Set the Right Management Tone
Beesley believes managers need to demonstrate how seriously they take theft. Holding one-on-one meetings with employees helps determine if they are experiencing difficulties on the job or at home which may lead them to steal. Open door policies also help foster a culture of transparency and accountability. Treating any unusual activity with suspicion is necessary, she advises. And finally, she adds, “Trust your instincts.”